Soft CPI Sparks Chaos Ahead Of FOMC: Bonds, Bitcoin, & Bullion Bid; Stocks Skid

Well that was a day… and we have tomorrow’s FOMC fun and games to look forward to still.

Softer than expected CPI (bear in mind that Core CPI was only 0.1ppt below expectations) sparked total chaos in markets with rate-trajectory expectations immediately jerking dovishly…

Source: Bloomberg

This did not affect the market’s view of tomorrow’s FOMC decision (50bps hike) but did dovishly shift expectations for Feb and March…

Source: Bloomberg

And that sent stocks, bonds, bitcoin, and bullion higher (and the dollar lower). But, as the day wore on, stocks gave their gains back (while the rest of the asset classes did not…

Source: Bloomberg

On the day, The Dow lagged, Nasdaq outperformed (up over 4.5% at its highs right after CPI), but most of those gains were given back by the close. By any normal standards a 1% gain in Nasdaq is decent but given the intraday swings it feels like a disappointment and now leaves it all up to Powell to decide whether traders have been naughty or nice…

The S&P 500 gapped open above the 200DMA, then drifted back below it to end the day…

The S&P 500 also briefly broke out above 2022’s downtrend line, but couldn’t hold it…

Energy stocks outperformed on the day, Consumer stocks were the biggest loser (20th month of real wage losses?) along with Utes (odd given rates tumbled). Tech stocks were the best performer at 10amET but gave most of it back…

Source: Bloomberg

TSLA continued to clubbed like a baby seal (again). The stock is now trading at 29 times projected earnings, according to data compiled by Bloomberg. While that’s still well above the S&P 500 Index’s 17 times forecast earnings, it’s the lowest since the company went public in 2010. The company’s market value fell below $500 billion for the first time since November 2020 Tuesday.

Source: Bloomberg

…and while liberal Twitter gloated at Elon Musk losing his #1 spot as the richest man in the world… we note he is still (only) worth $181 billion.

VIX’s fall today confirmed a ‘death cross’ but we do note that the last two ‘death crosses’ were almost immediately followed by a significant surge in VIX…

Source: Bloomberg

Treasuries were instantly bid on the CPI print and only drifted back a little. The short-end outperformed dramatically with 2Y -15bps,

Source: Bloomberg

An ugly 30Y auction spoiled the party a bit, reversing earlier gains…

Source: Bloomberg

The dollar dived to post-Payrolls lows…

Source: Bloomberg

Bitcoin surged up to one-month-highs near $18,000…

Source: Bloomberg

Oil continued its rebound with WTI back above $76…

Gold extended its gains, back above $1830 to its highest since early August…

Finally, will Powell spoil the party?

Source: Bloomberg

Of course it’s different this time.